Legislature(1995 - 1996)

04/13/1996 02:55 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 13, 1996                                        
                            2:55 p.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-96, #78, Side 1 and 2                                                    
  SFC-96, #79, Side 1 (000-575)                                                
  SFC-96, #79, Side 2 (575-326)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick Halford,  Co-chairman, convened the meeting  at                 
  approximately 2:55 p.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  All  committee members  (Co-chairmen Halford  and Frank  and                 
  Senators  Donley, Phillips, Rieger, Sharp, and Zharoff) were                 
  present.                                                                     
                                                                               
  ALSO ATTENDING:  Senator Green; Senator Taylor; Commissioner                 
  Karen Perdue, Dept.  of Health  and Social Services;  Laurie                 
  Otto, Deputy  Attorney General, Criminal  Division, Dept. of                 
  Law;  Kristen Bomengen,  Assistant  Attorney General,  Human                 
  Services  Section; Dept. of Law; Art Snowden, Administrative                 
  Director,  Alaska  Court System;  James  W.  Elliott, Acting                 
  Director, School  Finance, Dept.  of Education; Eddy  Jeans,                 
  School Foundation, School Finance, Dept. of  Education; Curt                 
  Lomas,   Welfare   Reform   Program,   Division  of   Public                 
  Assistance,  Dept. of  Health  and Social  Services; Shirley                 
  Dean,  Juneau Office,  Child  Support Enforcement  Division,                 
  Dept. of Revenue; and  aides to committee members  and other                 
  members of the legislature.                                                  
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB  70 -  PUBLIC SCHOOL FOUNDATION PROGRAM                                   
                                                                               
            Discussion  was  had  with  Senator  Taylor,   Dr.                 
            Elliott, and Eddy Jeans.  A draft CSSB 70, version                 
            "W" was adopted.   An amendment by  Senator Rieger                 
            to  delete  Sec. 16  from  the draft  was adopted.                 
            Amendment  by  Senator  Donley relating  to  pupil                 
            transportation was adopted.   A further  amendment                 
            by Senator  Donley relating  to unhoused  students                 
            was  adopted as amended.   CSSB 70  (Fin) was then                 
            REPORTED OUT of committee with  a $29,266.5 fiscal                 
            note from the Dept. of Education (K-12 Foundation)                 
            and a $1,992.0 from the  Dept. of Education (Pupil                 
            Transportation).                                                   
                                                                               
  SB  98 -  PERSONAL RESPONSIBILITY ACT                                        
                                                                               
                                                                               
            Continued review of a draft  CSSB 98, version "N,"                 
            (pages 13 through 51) was  had with Senator Green,                 
            Commissioner Perdue, Curt Lomas, Shirley Dean, and                 
            Kristen  Bomengen.   A  packet  of amendments  was                 
            distributed by Senator  Green and the transitional                 
            assistance  amendment  was  discussed.   Areas  of                 
            concern    relating    to    responsibilities   of                 
            grandparents, Alaska Native  Organizations' Family                 
            Programs,  transitional  assistance,  and  adverse                 
            action against the driver's license of  delinquent                 
            obligors were flagged for  further discussion at a                 
            work session  at 12:00 noon, April 14,  1996.  The                 
            bill was held in committee  for consideration at a                 
            meeting scheduled for 3:00 p.m., April 14, 1996.                   
                                                                               
  SB 320 -  NEW SUPERIOR COURT JUDGE FOR DILLINGHAM                            
                                                                               
            Discussion  was had  with Art  Snowden and  Laurie                 
            Otto.  The bill was then REPORTED OUT of committee                 
            with a $226.8 fiscal note from the Court System.                   
                                                                               
                                                                               
  SENATE BILL NO. 70                                                           
                                                                               
       An   Act  relating  to  the  public  school  foundation                 
       program; and providing for an effective date.                           
                                                                               
  Co-chairman  Halford directed that  SB 70 be  brought on for                 
  discussion.  Senator Randy Phillips MOVED for adoption of  a                 
  work draft  CSSB 70  (9-LS0652\W, Ford,  4/12/96).   SENATOR                 
  ROBIN  TAYLOR  came  forward  to  speak  to the  bill.    He                 
  explained that an  earlier draft contained a  mandatory mill                 
  equivalency paid  by each  community for  its school  system                 
  before the  district received  state funding for  additional                 
  education needs.   The rate was  set at 5  mills.  That  has                 
  been  adjusted  to  4.5  mills.    In doing  that,  a  major                 
  percentage of communities statewide are "dropped off because                 
  they're all paying more than that."                                          
                                                                               
  The Senator  directed attention to  a spread sheet  (copy on                 
  file in the  original Senate Finance  Committee file for  SB                 
  70) and  cited Anchorage,  Fairbanks, Juneau,  and MatSu  as                 
  examples of areas that would receive increased funding while                 
  a  $9 million reduction in  state general funds is effected.                 
  This occurs due to a shifting of funds from communities that                 
  can readily afford to pay the full cost of eduction from the                 
  existing tax base.   Funds that, in the past, have flowed to                 
  these  communities would  no longer  be needed and  would be                 
  available  for distribution to  communities that  have taxed                 
  themselves over and  above the mill  rate, to provide  basic                 
  education.  The theory behind the legislation is  "share the                 
  pain equally across the state."                                              
                                                                               
                                                                               
  Senator  Taylor  next  referenced the  existing  cap  on the                 
  formula and noted that many tax-based communities are at cap                 
  and may exceed it this year.                                                 
                                                                               
  The work  draft formula is driven  by need to provide  for a                 
  final  solution  to the  problem of  equitable distribution.                 
  The draft formula  changes existing statutes and  brings the                 
  state into compliance with federal law.                                      
                                                                               
  A  further  provision deducts  100  percent of  the eligible                 
  federal impact aid from basic need in determining the amount                 
  of state aid.   Senator  Taylor referenced indications  from                 
  districts that 100 percent provides no incentive to complete                 
  paperwork for  PL 874  moneys.   He suggested  the committee                 
  might wish to "give  them a fudge factor of a couple percent                 
  just for filling out the paperwork."                                         
                                                                               
  Directing  attention  to  Section 3  of  the  draft, Senator                 
  Taylor explained that before the  state would be required to                 
  contribute educational costs to a community, the locality is                 
  mandated  to  contribute  the  4.5  mill  minimum.    If 4.5                 
  generates  more  moneys than  the  community is  spending on                 
  education,  the  excess   flows  to   the  state  fund   for                 
  distribution to  communities taxing themselves  at a  higher                 
  rate.  Communities are allowed to contribute up to 2.5 mills                 
  of   additional  local  support  above  the  mandatory  4.5.                 
  Contribution  beyond   the  mandatory   level  qualifies   a                 
  community to receive  supplemental or  excess moneys.   Many                 
  communities  are  now  taxing  over  6  mills.    Section  4                 
  establishes the  pool for excess funds generated  by the 4.5                 
  mills.                                                                       
                                                                               
  Section  5  changes  the  number  of  students  required  to                 
  establish a funding community from 8 to 10.                                  
                                                                               
  Section  6  reduces  the  "trigger"  on  the  hold  harmless                 
  provision   from  the   current  10   percent  decrease   in                 
  instructional unit to a 5 percent decrease.  That only comes                 
  into effect in situations of declining enrollments.                          
                                                                               
  Section 7 cleans up the  formula for determining unit count.                 
  It reflects the 8 to 10 student change made in Section 5.                    
                                                                               
  Section 8  contains a  single-site fix to  cure the  ongoing                 
  problem.                                                                     
                                                                               
  Section 10  removes gifted  and talented  children from  the                 
  special  education  funding formula.   Senator  Taylor cited                 
  abuses  of   the  formula  whereby  certain  districts  have                 
  distorted numbers to gain additional funds.  The new formula                 
  contains  a  limit of  4.5  percent of  a  school district's                 
  enrollment.                                                                  
                                                                               
                                                                               
  Section 11 relates  to bilingual education.   Senator Taylor                 
  cited abuses in this area as  well.  Reductions are included                 
  in   the   formula   established  for   provision   of   the                 
  instructional unit  count per bilingual  student.  Reduction                 
  is 50 percent.                                                               
                                                                               
  Section 14 changes the  date at which student  counts occur.                 
  The historic deadline  has been October  15.  That date  has                 
  been  moved to November 20.  Section 15 provides flexibility                 
  in allowing districts to determine when they wish to conduct                 
  the count (sometime between October 15 and November 20).                     
                                                                               
  Section 16 contains  a "mini-hold harmless"  provision which                 
  gives the commissioner discretion to allow a school district                 
  caught between Sections 14 and 15 to show good cause why the                 
  district should not be  adversely impacted by the  manner in                 
  which the count was conducted.                                               
                                                                               
  Section 17 allows for promulgation of regulations.                           
                                                                               
  Sections 18 and 19 provide effective dates.                                  
                                                                               
  Senator Taylor acknowledged that the proposed  bill reflects                 
  a legislative  mandate forcing localities to  prioritize and                 
  dedicate  a  portion  of the  tax  base  to  education.   It                 
  requires  every community to dedicate 4.5  mills.  The state                 
  will then "match the rest."  He further remarked:                            
                                                                               
       If 4.5 mills happens to  generate $40 some million                      
       dollars out of the North Slope, and they only need                      
       $15  or  $20  for  education,  then  those  poorer                      
       districts, in this state, that aren't that wealthy                      
       ought to have  the benefit of those  funds so that                      
       their kids will also receive a decent education.                        
                                                                               
  The  purpose  of the  legislation  is  to  avoid the  equity                 
  problem being forced upon Alaska by the federal government's                 
  formula.                                                                     
                                                                               
  Discussion  followed  between  Senator  Rieger  and  Senator                 
  Taylor concerning  how numbers set forth on the spread sheet                 
  were calculated and what they include.                                       
                                                                               
  Senator Rieger requested further explanation of  Section 16.                 
  Senator  Taylor said it  was included "only  for purposes of                 
  providing  a transition  for the  change in  time  period in                 
  which you  count students."   Senator Rieger noted  that his                 
  reading  of the language  indicates that  in any  given year                 
  (1999 was used as an example) a district could opt to report                 
  membership numbers from  the earlier  year (1998).   Senator                 
  Taylor concurred  in  that understanding,  saying  that  the                 
  district could "fall back to the  previous year, but only if                 
  you have good cause  for doing so."  Senator  Rieger advised                 
  that it amounts to a "100  percent hold harmless for a  year                 
                                                                               
                                                                               
  on top of the 5  percent hold harmless . . . .  elsewhere in                 
  the bill."  Senator Taylor deferred further comment to staff                 
  from the Dept. of Education.                                                 
                                                                               
  In response to  a request for  a summary of changes  between                 
  the current draft and earlier  versions of the bill, Senator                 
  Taylor noted:                                                                
                                                                               
       1.   A drop from a mandated 5 mill equivalency to 4.5.                  
       2.   The 50 percent reduction in bilingual                              
       3.   Establishment of 4.5 percent of total district ADM                 
  as the         amount eligible for gifted programs.                          
                                                                               
  Senator  Zharoff  asked how  the  legislation would  work in                 
  areas with no  tax base.   Senator Taylor  noted that  those                 
  areas are presently receiving  PL 874 moneys.   Those moneys                 
  are contributed by the federal government in lieu  of taxes.                 
  Under the  proposed bill, those  districts would  contribute                 
  "that full amount  of their  PL 874" moneys  as their  local                 
  contribution and  "still share  in exactly  the same  dollar                 
  revenues that they were getting before."  If a community has                 
  a tax base but elects not to  tax it, the proposed bill "may                 
  very well require them to impose a 4.5 percent tax."                         
                                                                               
  EDDY  JEANS,  Project Assistant,  School  Foundation, School                 
  Finance,  Dept.  of Education,  came  before committee.   He                 
  explained that  the proposed  formula  computes a  statewide                 
  average  assessed  value  per  student.     For  REAAs,  the                 
  statewide average has been adjusted by  2.5 mills.  That 2.5                 
  mills is then multiplied  by the ADM to determine  the state                 
  share to REAAs.   For a  city/borough district, there is  an                 
  additional  computation  whereby  the district's  individual                 
  assessed  value  per student  is  compared to  the statewide                 
  average.  That produces a proportion  that is applied to the                 
  statewide  average  per   student  and  multiplied  by   the                 
  district's  ADM to  determine the  local  share.   The state                 
  share  is computed based on  the statewide average times the                 
  ADM.                                                                         
                                                                               
  Operation  of the  above  formulas  (per distributed  spread                 
  sheets)  was  discussed  using  both  communities  with  and                 
  without tax bases  as examples.  Further  review of existing                 
  district  funding compared  to  the  new  formula  followed.                 
  Senator Taylor noted  legislative need to address  area cost                 
  differentials in the future.                                                 
                                                                               
  Co-chairman Frank expressed concern regarding potential  for                 
  additional  state  expenditures  driven by  increased  local                 
  contributions.   Mr. Jeans said that would  not happen since                 
  the state share  is based  on the average  of the  statewide                 
  value per student.  Mr. Jeans directed attention to a spread                 
  sheet   dealing   with   local   effort   requirements   and                 
  supplemental equalization funding.  He voiced his reading of                 
  the bill to be that the  additional 2.5 mills above the  4.5                 
                                                                               
                                                                               
  is  required.   The  2.5  mills  is based  on  the statewide                 
  average.  Further discussion followed  using Anchorage as an                 
  example.                                                                     
                                                                               
  In response to  a further  question from Co-chairman  Frank,                 
  Mr. Jeans explained  that the proposed bill  would result in                 
  two formulae  working together  within the  umbrella of  the                 
  foundation  formula.   One  reflects  basic  foundation  aid                 
  computed   on   instructional   units,   times   area   cost                 
  differential, times the  unit value  of 61.   From that  the                 
  state   would  subtract   4.5   mills  of   required   local                 
  contribution and 100 percent of  impact aid funds to  arrive                 
  at   the   basic  state   allocation.     The   supplemental                 
  equalization  formula  would then  be  applied  to determine                 
  additional  state  aid.     Co-chairman  Frank  voiced   his                 
  understanding   that   greater  contribution   by   a  local                 
  government would not  "cost the  state more on  a per  share                 
  basis."   Senator  Taylor  concurred in  that understanding,                 
  saying:  "A local government cannot  drive more money out of                 
  the  state  by spending  more."   Mr.  Jeans noted  that the                 
  existing formula cap of 23 percent  of basic need remains in                 
  effect.                                                                      
                                                                               
  Further review of  spread sheets followed using  numbers for                 
  the Juneau-Douglas School  District as an example.   Senator                 
  Taylor noted  that the bill  would result in  "a significant                 
  tax  reduction  for  almost  every  major community  in  the                 
  state."  The Governor's legislation "gives more money to the                 
  people who weren't taxing themselves."  The Senator stressed                 
  that  the proposed formula  change would  "take care  of the                 
  inequality problem for a lot of years to come . . . ."                       
                                                                               
  Co-chairman Frank noted general discussion  of the impact to                 
  the   state  treasury  resulting  from  application  of  the                 
  proposed bill  to the North  Slope.  He  referenced existing                 
  tax caps under state law and asked how they impact the North                 
  Slope  Borough  and oil  and  gas property  taxes.   Senator                 
  Taylor  said  discussions  indicated impact  of  "about  $29                 
  million over and above local effort right now."  Co-chairman                 
  Halford voiced his understanding that the North Slope is  at                 
  the cap and would have to cut its budget in half.                            
                                                                               
  Further discussion followed regarding  the statutory cap  as                 
  well as bonded indebtedness.  Senator Taylor remarked:                       
                                                                               
       Whatever percentage  of their  30 mills  that they  are                 
       currently dedicating to paying off  that huge bond debt                 
       they've  got  up there  . .  .  shouldn't qualify  as a                 
       portion of the total  30 mill cap so as to prevent them                 
       from  having  the   revenues  to  pay  for   their  own                 
       education.                                                              
                                                                               
  Additional discussion of North Slope taxes and state oil and                 
  gas taxes followed.                                                          
                                                                               
                                                                               
  END:      SFC-96, #78, Side 1                                                
  BEGIN:    SFC-96, #78, Side 2                                                
                                                                               
  Co-chairman  Halford  quoted  from  a  May, 1995,  Dept.  of                 
  Revenue analysis of the 5 mill version of the bill:                          
                                                                               
       The state revenue loss based on 43.56 (the  offset) for                 
       the  North Slope Borough  would have  been $34,321,249.                 
       However,  the  Borough  is  already   at  the  30  mill                 
       limitation  provided  for  in  Title   29.    Since  no                 
       additional  property  tax  revenue  is  available,  the                 
       Borough operating budget  must be  reduced over 50%  to                 
       cover the additional educational funding.                               
                                                                               
  [The foregoing  analysis was  set forth  on a  May 3,  1995,                 
  fiscal note for SB 70 from the Dept. of Revenue.]                            
                                                                               
  Discussion  of the  differential  between  mills applied  to                 
  bonded   indebtedness   and  general   operations  followed.                 
  Senator Taylor again questioned whether  the North Slope was                 
  utilizing  a majority  of its tax  revenues to  repay bonded                 
  indebtedness.  Co-chairman Halford stressed  that the cap is                 
  complicated,  and  there may  be  other considerations.   He                 
  suggested  that  the  "cap  may  only  be  the  cap  in  the                 
  deductibility  against   the  statewide  ad   valorem  tax."                 
  Senator  Taylor remarked that  if impact on  the North Slope                 
  would  be  as   dramatic  as  indicated,  perhaps   phase-in                 
  provisions would be necessary.                                               
                                                                               
  Additional discussion  of tax applications within  the North                 
  Slope Borough followed.                                                      
                                                                               
  A  comparison  of  funding  under  current  law  versus  the                 
  proposed bill followed using Pelican as an example.                          
                                                                               
  Senator Zharoff next inquired concerning changes  in funding                 
  for bilingual programs.   Mr. Jeans said  the department had                 
  not  yet  had  an  opportunity  to  run numbers.    He  then                 
  instructed members regarding how computations would be made.                 
  Mr. Jeans  noted that it appears rural districts would lose,                 
  and urban districts  would gain, under the  proposed change.                 
  He acknowledged  that he  would not  be sure  of that  until                 
  calculations are made.  Senator Zharoff asked if  the intent                 
  was to "get  away from bilingual as  you get further up  the                 
  grades."  Mr.  Jeans voiced his  understanding of intent  to                 
  not reward districts  for classifying "children in  a higher                 
  weight  category."    A  uniform  funding  level  should  be                 
  provided for all bilingual students.                                         
                                                                               
  Co-chairman  Halford again referenced  the tax  situation in                 
  the North Slope Borough.  He advised of a formula based on a                 
  limitation on assessment.  There is  no limitation on tax as                 
  it applies to  debt service.  The borough  budget (including                 
                                                                               
                                                                               
  debt   service)  for   9,000   to   12,000   people   totals                 
  approximately  $225  million.   Of  that, $165.6  million is                 
  slated for debt service.                                                     
                                                                               
  Senator  Zharoff  asked how  the  proposed bill  compares to                 
  state  board  of   education  efforts  to   restructure  the                 
  foundation formula.  JAMES ELLIOTT,  Acting Director, School                 
  Finance,  Dept.  of  Education,  noted  that the  board  has                 
  considered quotas on  "some of  the categorical weights"  as                 
  well as  a "block  plan."   The proposed  bill is  radically                 
  different.                                                                   
                                                                               
  Senator Zharoff asked if the  area differential would remain                 
  applicable  under  the  proposed  draft.     Senator  Taylor                 
  responded that the bill does not deal with the differential.                 
  It is a separate matter.                                                     
                                                                               
  Co-chairman Frank  asked if  the bill  solves the  disparity                 
  problem.    Mr.  Jeans  remarked  that  the  draft  enhances                 
  district ability to contribute local revenue by the increase                 
  from  4  to  4.5.    If districts  now  at  cap  continue to                 
  increase, that  may cause a problem is  disparity.  However,                 
  the  supplemental  equalization provides  additional revenue                 
  outside the  instructional units.   That  will increase  the                 
  unit value and may offset disparity.                                         
                                                                               
  Senator  Rieger  MOVED  for  deletion  of  Section  16  (the                 
  transitional section  involving the  prior-year count)  from                 
  the draft.   He  referenced discussion  indicating that  the                 
  section essentially provides  a second hold harmless  on top                 
  of the 5  percent hold harmless  within Section 6.   Senator                 
  Zharoff  OBJECTED,  advising  that he  was  unsure  what the                 
  impact of removal might be. Co-chairman Halford called for a                 
  show of hands.   The MOTION CARRIED on a vote of 5 to 1, and                 
  Section 16 was DELETED.                                                      
                                                                               
  Senator  Phillips  MOVED  that  CSSB   70  (Fin)  pass  from                 
  committee.    Senator  Zharoff  OBJECTED.    Senator  Donley                 
  advised that  he  wished to  offer several  amendments.   He                 
  explained  that the  first relates  to pupil  transportation                 
  while the  second relates  to unhoused  students.   He  then                 
  formally MOVED for  adoption of  the AMENDMENT dealing  with                 
  transportation.  Co-chairman  Halford called  for a show  of                 
  hands.  The AMENDMENT was ADOPTED on a vote of 4 to 3.  (Co-                 
  chairman Frank and Senators Sharp and Zharoff were opposed.)                 
                                                                               
  Senator  Donley  then  MOVED for  adoption  of  an AMENDMENT                 
  relating  to  assessment of  unhoused  students in  portable                 
  units.  The  intent is that  the department not count  these                 
  students as  housed when  it makes  it  assessment of  where                 
  construction  needs to occur.   Co-chairman Halford inquired                 
  regarding floor discussion of  the 10,000 limit.   He voiced                 
  need to count unhoused students in all locations, regardless                 
  of the  size of  the district,  and noted  a preference  for                 
                                                                               
                                                                               
  removal of  the 10,000  floor.   Senator Phillips  suggested                 
  that "and the district has a population greater than 10,000"                 
  be removed from  the amendment.  Co-chairman  Halford raised                 
  concern that the  word "temporary" may  become a major  term                 
  within regulatory  definition and suggested  that "temporary                 
  relocatable facilities"  might  be  more  direct.    Senator                 
  Donley  formally  MOVED to  insert "relocatable"  and delete                 
  language  relating  to  district  populations  greater  than                 
  10,000 so  that  underlined language  within  the  amendment                 
  would read:                                                                  
                                                                               
       for  purposes   of  this  subparagraph,   students  are                 
       considered  unhoused if  the students attend  school in                 
       temporary relocatable facilities;                                       
                                                                               
  Co-chairman  Halford called for  objections to the AMENDMENT                 
  to  the AMENDMENT.    No objection  having been  raised, the                 
  AMENDMENT to the AMENDMENT was ADOPTED.  Co-chairman Halford                 
  next  called  for  a  show  of  hands  on  adoption  of  the                 
  AMENDMENT.  The AMENDMENT was ADOPTED on a unanimous vote of                 
  7 to 0.                                                                      
                                                                               
  Senator Randy  Phillips renewed  his MOTION  for passage  of                 
  CSSB 70 (Fin).  Senator Zharoff again raised OBJECTION.  Co-                 
  chairman Halford called  for a  show of hands,  and CSSB  70                 
  (FIN) was  REPORTED OUT of  committee with two  fiscal notes                 
  from the  Dept.  of Education  (a  $29,266.5 note  for  K-12                 
  foundation and a  $1,992.0 note  for pupil  transportation).                 
  Co-chairman Halford and Senators Donley, Phillips, and Sharp                 
  signed the committee report with a "do pass" recommendation.                 
  Co-chairman   Frank   and   Senator    Rieger   signed   "no                 
  recommendation."  Senator Zharoff signed "do not pass."                      
                                                                               
                                                                               
  SENATE BILL NO. 320                                                          
                                                                               
       An Act increasing  the number of superior  court judges                 
       designated for  the Third Judicial  District to provide                 
       an additional superior court judge at Dillingham.                       
                                                                               
  Co-chairman Halford directed  that SB 320 be  brought on for                 
  discussion.   ART SNOWDEN,  Administrative Director,  Alaska                 
  Court System, came before committee.  He explained  that the                 
  new judge would  fill a hole in the  Dillingham/Naknek area.                 
  Citizens in the area have raised concern that many cases are                 
  "pled  out"  because of  lack  of prosecutorial  and defense                 
  assets.   Necessity for  judges to travel  from Anchorage to                 
  preside  at  Dillingham   depletes  ability  to  cover   the                 
  Anchorage caseload.                                                          
                                                                               
  LAURIE  OTTO,  Deputy Attorney  General,  Criminal Division,                 
  Dept. of  Law,  next  came  before committee.    She  voiced                 
  support  for  the  legislation  and  directed  attention  to                 
                                                                               
                                                                               
  correspondence citing the basis for support.  She noted that                 
  much  of  the problem  associated  with prosecutions  in the                 
  region is inability to "get  adequate court time to  process                 
  the cases within  the time limit  set in state speedy  trial                 
  rules."                                                                      
                                                                               
  In response to a question from  Senator Sharp, Ms. Otto said                 
  that the position would be new to the region.  Facilities (a                 
  court  building  in  Dillingham staffed  by  clerks)  are in                 
  place.  There is a public defender in the area, but district                 
  attorneys serve the region out of the Anchorage office.  One                 
  district attorney dedicates full time to Dillingham.  If the                 
  judge is placed in Dillingham,  the Anchorage position would                 
  move to the region as well.                                                  
                                                                               
  Senator Rieger MOVED for  passage of SB 320  with individual                 
  recommendations  and  the  accompanying  fiscal  note.    No                 
  objection having  been raised,  SB 320 was  REPORTED OUT  of                 
  committee  with a $226.8 fiscal  note from the Court System.                 
  All members  signed the  committee report  with a  "do pass"                 
  recommendation with the  exception of  Senator Phillips  who                 
  signed "no recommendation."                                                  
                                                                               
                                                                               
  SENATE BILL NO. 98                                                           
                                                                               
       An Act making  changes related to  the aid to  families                 
       with dependent children program, the Medicaid  program,                 
       the  general relief assistance  program, and  the adult                 
       public assistance program; directing  the Department of                 
       Health  and  Social Services  to  apply to  the federal                 
       government for  waivers to implement the  changes where                 
       necessary; relating to  eligibility for permanent  fund                 
       dividends of  certain  individuals  who  receive  state                 
       assistance,  to notice  requirements applicable  to the                 
       dividend program; and providing for an effective date.                  
                                                                               
  Co-chairman  Halford directed  that  CSSB 98,  Version  "N,"                 
  dated  4/10/96,  be  again   brought  before  committee  for                 
  continued sectional  review.   SENATOR  LYDA GREEN  directed                 
  attention to Page  13 of the  draft and commenced review  of                 
  "Disqualifying Conditions."                                                  
                                                                               
  [Tape malfunction.   There is no recording for  this portion                 
  of the meeting.  Minutes  reflect transcription of shorthand                 
  notes.]                                                                      
                                                                               
  Co-chairman Halford referenced language at Page 15, line 19,                 
  relating to "a  crime that  is classified as  a felony"  and                 
  asked what would happen if serious class-A misdemeanors were                 
  added.    CURT LOMAS,  Welfare  Reform Program,  Division of                 
  Public  Assistance, Dept.  of  Health and  Social  Services,                 
  explained that the wording was  precisely taken from federal                 
                                                                               
                                                                               
  welfare reform language.   He said  he did not know  whether                 
  the state could be more restrictive.                                         
                                                                               
  Senator Green next noted subparagraphs (1), (2), and (3)  at                 
  Page 16, lines 17  through 19, and advised that  they relate                 
  to  fraud.    She  further  pointed to  application  process                 
  requirements set forth on Pages 16 and 17.                                   
                                                                               
  Directing  attention to Page  18, subsection (3)(c), Senator                 
  Green advised  that provisions  relate to  seasonal workers.                 
  Co-chairman Halford referenced the list of utilities  within                 
  subsection (B), suggested  that a telephone does  not appear                 
  to be as basic as other  services listed within the section,                 
  and suggested that it be flagged.                                            
                                                                               
  [Tape malfunction was  corrected at  this point.   Remaining                 
  minutes reflect transcription  of the tape recording  of the                 
  meeting.]                                                                    
                                                                               
  Referencing  Page  19,  Senator  Green  explained  that  the                 
  diversion program is  the same as  HB 78 and the  Governor's                 
  bill.    In  the  proposed  draft,  however,  it  has   been                 
  restricted to adults.  Minors  had previously been included.                 
  The program allows individuals to receive a lump-sum payment                 
  to ensure  that  they will  not  be "going  on  to the  full                 
  benefit program."                                                            
                                                                               
  Language  relating to assistance to  minors at Page 20, line                 
  20, was taken from HB 78.                                                    
                                                                               
  The  family  self-sufficiency  plan set  forth  on  Page 21,                 
  commencing with  line 11,  will be  part of  the intake  and                 
  evaluation  of  those coming  into  the  program.   It  will                 
  involve a plan with benchmarks, time limits, conditions that                 
  must be in place, and how compliance will be achieved.                       
                                                                               
  Page   22  language  relating   to  participation   in  work                 
  activities  was  taken  directly  from  federal  law.    The                 
  emphasis here is on work.                                                    
                                                                               
  Provisions at Page 23 reflect existing law.                                  
                                                                               
  Directing attention  to Page  24 language concerning  agency                 
  collaboration,  Senator Green advised  of instances when the                 
  legislature had need  of more information than  is currently                 
  provided.    She  further  noted  that  temporary  positions                 
  involved in the effort are  exempt.  Interagency efforts are                 
  also to be devoted to job training and development.                          
                                                                               
  Senator  Green next  referenced  Page 25  and  noted that  a                 
  proposed  Amendment  would remove  Federal-State Cooperation                 
  language commencing at line 6.  It is considered to  be "too                 
  loose."  It gives the department too much authority.                         
                                                                               
                                                                               
  Referencing   the   Alaska   Native  Organizations'   Family                 
  Assistance  Program provisions commencing  at Page  25, line                 
  31, Senator Green advised that the commissioner of the Dept.                 
  of Health  and Social  Services  would speak  to the  issue.                 
  Senator Green  indicated that the provisions  may ultimately                 
  not be needed.                                                               
                                                                               
  The Senator  referenced provisions  for establishment of  an                 
  emergency account per  language at Page 26 and  advised that                 
  inclusion should be a finance  committee decision.  Language                 
  relates to provisions  under the new reform  act whereby the                 
  department  may receive  additional funds  from the  federal                 
  government, and those  funds may not  all be spent within  a                 
  particular fiscal year.   The department will speak to  this                 
  issue.                                                                       
                                                                               
  Page   27  language,   relating  to   Appeals  and   Dispute                 
  Resolution, raises questions  regarding department  adoption                 
  of regulations establishing the  informal dispute resolution                 
  process.    Senator Green  advised  that  she did  not  know                 
  whether a procedure is presently in place for hearings or if                 
  it is necessary to adopt a  new process.  This area requires                 
  clarification.                                                               
                                                                               
  Senator Green  advised of  a proposed  amendment which  will                 
  relate to  Sanctions  and  Recovery  of Costs  at  Page  27.                 
  Provisions deal both with recipients who refuse to cooperate                 
  as well as those who receive  benefits to which they are not                 
  entitled.  Civil action is available via subsection (d).                     
                                                                               
  Definitions  set  forth   at  Page  28  include   terms  not                 
  previously defined.  Senator Green referenced subsection (7)                 
  and noted drafter inclusion of  the word "unemancipated."  A                 
  proposed amendment would remove the word.                                    
                                                                               
  Senator  Green next  advised of  numerous  technical changes                 
  involved in changing  the name of  the Aid to Families  with                 
  Dependent  Children   to  the  Alaska   Family  Independence                 
  Program.                                                                     
                                                                               
  Senator Green referenced Section 13,  Page 30, and explained                 
  that  the  language  was  provided   by  the  Child  Support                 
  Enforcement Division.                                                        
                                                                               
  END:      SFC-96, #78, Side 2                                                
  BEGIN:    SFC-96, #79, Side 1                                                
                                                                               
  The  interest  rate  presently  charged  in  computation  of                 
  arrearages is 12 percent.  The division has asked that it be                 
  reduced to 6 percent.  Senator Randy Phillips noted need for                 
  closer review  of the  request.    Senator  Green read  from                 
  backup  material  indicating that,  for  many years,  the 12                 
  percent rate  was reasonable  given the  prevailing rate  at                 
  that time.   However,  a rate of  6 percent per  year better                 
                                                                               
                                                                               
  reflects existing rates.                                                     
                                                                               
  Directing attention to  Page 31,  Section 15, Senator  Green                 
  noted language from HB 78 relating to participation by  both                 
  sets of grandparents  in support  of a child  born to  minor                 
  parents.  The responsibility remains  in effect until one of                 
  the parents reaches the age of 18.  The parents of the minor                 
  mother are  more often involved  in support  of the  infant.                 
  This language would provide some balance to that support.                    
                                                                               
  Section 24,  at Page  33, was  also requested  by CSED.   It                 
  relates to correction of  clerical and administrative errors                 
  by the agency.  Correction  of miscalculations of arrearages                 
  is presently very cumbersome.                                                
                                                                               
  Section 25  language relating  to adverse  action against  a                 
  delinquent obligor's occupational license was  in both HB 78                 
  and  the  Governor's  bill.   It  provides  for  issue of  a                 
  temporary license in  instances of arrearages.  A process is                 
  established by which the obligor may work with the agency to                 
  develop a plan for repayment.  Provisions cover occupational                 
  and driver licenses.   This effort  would require a  network                 
  between CSED and licensing  agencies.  The bill specifies  a                 
  150-day  window in  which the  obligor must  either pay  the                 
  arrearage,  establish   a  payment  plan,   or  request   an                 
  administrative hearing.   Senator  Phillips questioned  CSED                 
  ability to take on this additional  task when the agency has                 
  yet to accomplish its primary purpose.  Senator Rieger asked                 
  if the  provision is  required by  federal reform.   Senator                 
  Green  responded, "This and  more is in  federal law--in the                 
  federal reform act."                                                         
                                                                               
  Section 26  incorporates contractors that  administer grants                 
  within bill provisions.                                                      
                                                                               
  Section 30, Page 46, relates to day-care benefits.  The only                 
  substantive change is removal of the  word "net" (line 6) to                 
  bring language into conformity with federal law.                             
                                                                               
  Senator Green  next directed attention to Page  47, line 23,                 
  and noted addition of the following:                                         
                                                                               
       or a federal program designated as the successor to the                 
       aide to families with dependent children program.                       
                                                                               
  Referencing Page 49,  line 13, Senator  Green noted need  to                 
  add "and legislature" following the word "governor."                         
                                                                               
  Co-chairman Halford asked  if provisions within Sec.  35, at                 
  Page  47,  reflect  federal law.    Senator  Green responded                 
  affirmatively.  Curt Lomas again  came before committee.  He                 
  explained that  current federal  law contains  a requirement                 
  for   the   language.     All   versions  of   the  personal                 
  responsibility  act,  including  those being  considered  by                 
                                                                               
                                                                               
  Congress, have a requirement that  the state establish rules                 
  which restrict the use of public assistance case information                 
  to purposes specifically related to program administration.                  
                                                                               
  Co-chairman Halford asked if availability of the information                 
  to Legislative Budget  and Audit and  individual legislators                 
  would  violate  federal  law.   Mr.  Lomas  said Legislative                 
  Budget and Audit currently conducts program audits.  He said                 
  he was unfamiliar with what level of access the division has                 
  at the present time.                                                         
                                                                               
  Referencing statutory  citations slated for repeal  per Page                 
  48, Co-chairman  Halford  requested  a  list  of  repealers.                 
  Senator Green remarked  that the  existing AFDC program  and                 
  the Jobs program  (AS 47.25) constitute the  majority of the                 
  citations.   She said  she would  subsequently confirm  that                 
  repeals are limited to those programs.                                       
                                                                               
  In concluding her review, Senator Green referenced effective                 
  dates listed on Page 51.   She noted language within Section                 
  54 allowing for  enaction following federal law  changes, if                 
  new federal law is forthcoming.                                              
                                                                               
  Co-chairman Halford took  exception to portions of  the bill                 
  relating to Alaska  Native Organizations' Family  Assistance                 
  areas, suggesting that, "That's a governmental function that                 
  will create  Indian  country."    Senator  Green  responded,                 
  "There's no opposition  to removing  that section .  . .  ."                 
  Co-chairman Halford added that there are benefits in some of                 
  the  federal provisions.   He said  there was  nothing wrong                 
  with using the  Indian Self-Determination  Act to get  local                 
  entities--the  closest  entities  to  the  people--to   make                 
  decisions.  The question is,                                                 
                                                                               
       If any of the entities . . . on the list . . . are                      
       now recognized as tribes, and we authorize them to                      
       provide a governmental function . . . defined by a                      
       service area,  we're walking  into a  trap on  the                      
       next issue down that road.                                              
                                                                               
  As  long  as  the twelve  entities  listed  at  Page 26  are                 
  incorporated under the  laws of the  state of Alaska and  do                 
  not  have  a tribal  identity,  they are  probably  the best                 
  entities to  do the work.   Co-chairman  Halford voiced  his                 
  understanding  that federal  law  provides  benefits to  the                 
  state at  a higher  rate of  reimbursement for having  these                 
  entities perform the functions.   Senator Green subsequently                 
  advised  that  the  entities  listed  at  Page  26  are  all                 
  incorporated under  the laws of the state.   Language within                 
  the  bill  was  also reworded  to  delete  the  reference to                 
  tribes.    The  Senator  further  noted   provisions  within                 
  subsection  (c)  which  require  the  listed  Alaska  Native                 
  organizations to waive any claim to sovereign immunity.                      
                                                                               
                                                                               
  Co-chairman  Halford  voiced his  understanding  that listed                 
  entities would  be providing  services to  all residents  of                 
  their areas, both Native  and non-Native.  A reading  of the                 
  bill indicates  that service  would  only be  provided to  a                 
  "racially    defined    constituency."       KAREN   PERDUE,                 
  Commissioner, Dept. of Health and Social Services, explained                 
  that under present language, the  organization would write a                 
  plan and apply for the federal  portion of the AFDC program.                 
  Subsection  (b) would allow the state to participate in that                 
  planning.  Funds received from  the federal government would                 
  cover  only  racially  defined  members.    That  would  not                 
  prohibit the state from contracting with the organization to                 
  provide other services.                                                      
                                                                               
  Further  discussion  of  operation of  the  program followed                 
  between  Commissioner Perdue and  Co-chairman Halford.   The                 
  Co-chairman questioned legislative ability to appropriate to                 
  a  racially  defined  function.     He  suggested  that  the                 
  separation  of the  program and  service of  two  classes of                 
  recipients  would  cause  problems.    Commissioner   Perdue                 
  concurred in  concern.   She  said  that when  the  Governor                 
  expressed his views on  the issue, he said it  was important                 
  that  program benefits  be comparable.   That does  not mean                 
  they have  to be  exactly the same.   The  intent is  to get                 
  local  entities  to  design  programs  that  work  in  their                 
  communities.   Co-chairman Halford  reiterated concern  that                 
  the proposed arrangement would create  a situation where the                 
  program at  Bethel would  provide a  different benefit to  a                 
  Bethel Native than  it does  to a Bethel  non-Native.   That                 
  appears to raise equal protection arguments the court system                 
  will not tolerate.   Commissioner Perdue pointed  to ongoing                 
  WIC program  administration by the  Tanana Chiefs Conference                 
  on a non-discriminatory basis.                                               
                                                                               
  Senator  Sharp referenced  language  within subsection  (b),                 
  Page 26, and voiced  his belief that, as written,  it allows                 
  for  a racially defined program.   He suggested that removal                 
  of  "Alaska  Native" within  the  subsection might  cure the                 
  problem.  Commissioner  Perdue voiced  her desire to  create                 
  programs that work locally and do not pit one person against                 
  another.                                                                     
                                                                               
  The commissioner stressed  need for  the department to  work                 
  with  listed  organizations.    She  expressed concern  over                 
  potential for a tribe  to write its own plan, apply  for the                 
  federal share, and receive the funding.  Co-chairman Halford                 
  voiced his understanding  that the state share  provides the                 
  incentive to work  cooperatively with  the department.   The                 
  commissioner concurred.                                                      
                                                                               
  Further  discussion followed  between Co-chairman  Frank and                 
  the commissioner  regarding operations of the  federal block                 
  grant.                                                                       
                                                                               
                                                                               
  Co-chairman  Halford  voiced  additional  concern  regarding                 
  broad language and  authorities as well as  the tethering of                 
  occupational licenses to support payments, because of CSED's                 
  past performance.                                                            
                                                                               
  Co-chairman  Halford  announced  his intention  to  continue                 
  review of the bill at 3:00 p.m. the following afternoon.  He                 
  then asked that the  sponsor and department  representatives                 
  speak to the packet of proposed amendments.                                  
                                                                               
  Senator Green directed attention to  the first amendment and                 
  noted   that   it   relates  to   transitional   assistance.                 
  Commissioner Perdue explained that  the department presently                 
  authorizes  12  months  of child  care  after  an individual                 
  leaves AFDC.  Testimony at statewide hearings indicated that                 
  people would leave welfare  much faster if they  had medical                 
  and  child care.    The amendment  would  extend periods  of                 
  transitional assistance to 24 months for day care.  It would                 
  also  extend  Medicaid  medical  care  for children  for  an                 
  additional year.  The cost of the Medicaid extension for the                 
  first partial year  would be $150.0  in general funds to  be                 
  matched by federal dollars.   Co-chairman Halford voiced his                 
  understanding that Medicaid  would cover  the parent for  12                 
  months and the child for 24.  The commissioner concurred and                 
  added that the child care portion  would cost $700.0 for the                 
  first full year.                                                             
                                                                               
  END:      SFC-96, #79, Side 1                                                
  BEGIN:    SFC-96, #79, Side 2                                                
                                                                               
  Further discussion  ensued regarding changes to  the program                 
  intended to discourage individuals from going on welfare for                 
  a  period  of  time  in order  to  obtain  extended  medical                 
  benefits.                                                                    
                                                                               
  Additional discussion followed concerning the voucher system                 
  for child  care and  calculation of  costs per  child.   Mr.                 
  Lomas advised of a typical cost of $450 a month.                             
                                                                               
  In response to a question from Co-chairman Halford regarding                 
  numbers associated with 185 percent of the poverty level for                 
  Alaska, Mr. Lomas advised of $2,501 a month gross income for                 
  a family of three.                                                           
                                                                               
  Senator  Rieger  expressed  a   desire  to  delete  language                 
  relating to 150-day  temporary license provisions.   He said                 
  he  would   be  more  comfortable  with   establishment  via                 
  regulation, if such a provision is mandated  by federal law.                 
  Co-chairman Halford  voiced a  desire to  delete the  entire                 
  license  section.     He   acknowledged  that  the   federal                 
  government might impose the requirement.                                     
                                                                               
  Senator  Randy  Phillips  referenced  language  relating  to                 
  grandparent  liability (Page  31) and  quoted the  following                 
                                                                               
                                                                               
  concern raised by a constituent who practices family law:                    
                                                                               
       Teenagers  who do  not  want  to follow  household                      
       rules  can   easily  squeeze  into   one  of   the                      
       exceptions  and  begin  collecting  child  support                      
       based on  all four  of  their respective  parents'                      
       income . . . .                                                          
                                                                               
  SHIRLEY  DEAN,  Juneau  Office,  Child  Support  Enforcement                 
  Division,  Dept.  of Revenue,  came  before committee.   She                 
  advised that if  the teenage  mother voluntarily leaves  her                 
  home, her parents would not be obligated, but the parents of                 
  the infant's teenage  father would  be.  Responsibility  for                 
  non-custodial  parenthood   would  be  transferred   to  the                 
  father's  parents.    Senator Green  noted  that grandparent                 
  responsibilities  were  included within  HB  78 via  a floor                 
  amendment in the House.  Co-chairman Frank asked if paternal                 
  grandparents would have  to provide  support if the  teenage                 
  mother  resides  with  her  parents.    Ms.  Dean  responded                 
  affirmatively and advised that the  reverse would be true if                 
  the  teenage  mother was  living  with the  teenage father's                 
  parents.  The attempt is  to equalize responsibility between                 
  both sets of parents.                                                        
                                                                               
  Lengthy discussion of grandparent  provisions followed using                 
  a number of different scenarios.                                             
                                                                               
  Additional discussion ensued  regarding the two-year  bridge                 
  provision and the five-year limitation  on the program.  Co-                 
  chairman Halford suggested that the  committee might wish to                 
  include sunset provisions for the  two-year bridge.  Senator                 
  Green  cautioned  that  a two-year  sunset  might  not allow                 
  sufficient  time.  Mr.  Lomas reiterated  that  current  law                 
  provides  a 12-month transitional period.  Provisions within                 
  the proposed bill would extend the program for an additional                 
  12 months.   The program is not new  but rather an extension                 
  of  an  existing program.    Co-chairman Halford  voiced his                 
  understanding  that   the  fiscal   note  only   covers  the                 
  extension.  Mr. Lomas concurred.                                             
                                                                               
  Co-chairman Halford  announced a  work session  on the  bill                 
  commencing at noon the following day.   He advised of intent                 
  to have a proposed committee substitute available for review                 
  by 3:00 p.m.   Senator Phillips voiced intent to  prepare an                 
  amendment  to  remove  provisions  relating  to  grandparent                 
  responsibility.    He  also  concurred  in  Senator Rieger's                 
  proposed  change  to  licensing  provisions.     Co-chairman                 
  Halford  expressed a  preference to remove  both provisions.                 
  Senator Green advised of a  proposed amendment providing for                 
  CSED license  review to become effective with implementation                 
  of federal welfare.                                                          
                                                                               
  ADJOURNMENT                                                                  
                                                                               
                                                                               
  The meeting was adjourned at approximately 6:00 p.m.                         
                                                                               

Document Name Date/Time Subjects